Nokia’s Handset Chief Targets 500m Handsets This Year With Focus on India

Tuesday, January 5, 2010

It comes as no surprise that Nokia’s new handset chief, Rick Simonson, chose an Indian newspaper for an interview setting out his 2010 plan to fight back against Samsung and Apple. India is the market where Nokia’s market share is largest, and where it has the most convincing growth strategy based around web services for the ’next billion’. It is also a territory where many key rivals are floundering.

But the message from Simonson, who moved from the CFO position to his new role in October, was aimed at the whole world, not just India. He predicts that Nokia will ship over 500m handsets this year, bringing it back to its customary targeted market share of 40%. However, a Nokia spokesperson told news agency Reuters that the firm had not changed its official forecasts for 2010, which are for its market share to remain flat (it is likely to end 2009 around 37% or 38%) against an overall industry increase of 10% in unit terms.

Nokia will stick to a three-platform strategy based on Symbian, the emerging Linux-based Maemo at the high end, and Series 40 at the low end. Given the huge breadth of the vendor’s range, three operating systems for different target markets is not excessive, Simonson argues. But overall, especially in the smartphone segment, “there is definitely not enough room for more than four or five operating systems.” He played Nokia’s trump card, its massive scale, which underpins its supply chain efficiencies, and should enable it to appeal to developers. “Scale is critical,” he said. “For instance, Palm’s OS is very good, but with less than 1% of the global volumes, it won’t be too appealing to developers.”

He admitted that, despite these advantages, Nokia had lost ground in the smartphone sector since mid-2008, though said that decline had been arrested in the second half of 2009 and would be reversed in 2010, even against Apple. “The New Year will see our recovery in smartphones with the introduction of Maemo and the stabilization of the Symbian operating system, which by the way, continues to be the platform for the largest number of smartphones, globally,” he said, reminding us that 50% of the world’s smartphones run Symbian OS.

He also repeated a common Nokia complaint, that analysts are only interested in north America, its worst major market, and tend to assume the pattern is the same globally. “There is a lot of money to be made in the north American market and since we are not doing too well there, it has resulted in our stock performance – this issue has played up and media coverage makes it appear it the same across the world, which is not the case.”

It is clear that Nokia’s real growth opportunities lie in emerging markets though, and its chief stalking horse application is simple email for first-time users. Its apps are now available in 180 countries and Simonson says: “We don’t think that people in emerging markets need hundreds of thousands of apps, but rather they need ones that are relevant to them, those that can improve the quality of their lives. We will emerge successful here because an application that has relevance for emerging markets can be used across Asia, Africa and Latin America because of our reach. We will win because our size and scale enables us to have an active dialog with over a billion customers who use our products.”